Dairy giant plans to invest hundreds of millions in 2018

By Rod Addy contact

- Last updated on GMT

Arla plans to make Aylesbury home to the production of lactose-free products for the UK market
Arla plans to make Aylesbury home to the production of lactose-free products for the UK market

Related tags: Arla foods uk, Investment

Ingredients firm Arla aims to invest £460M globally in 2018, including £72M in the UK, amid plans to create a UK manufacturing hub for its Lactofree brand, upgrade production and champion eco-friendly packaging initiatives.

The farmer-owned dairy cooperative confirmed the cash would be invested in upgrades to 10 of its 12 sites in the UK, Arla’s largest single market.

The biggest proportion of the UK spend – £33.6M – has been earmarked for its carbon net zero site in Aylesbury as it becomes the UK home to production of Arla’s lactose-free dairy products under its Lactofree brand. The move would mean such products sold to the UK market would be made domestically, rather than being imported from Denmark and Germany, a spokeswoman for the company told FoodManufacture.co.uk.

The Aylesbury facility uses milk from UK farmers in the south east and the Midlands, and the spokeswoman said the Lactofree development “will create jobs, but it’s hard to tell how many at this stage​”.

The company said the UK was a key market for lactose-free products and it would use its experience in Scandinavian markets to meet the increasing UK demand.

The investment in Aylesbury would also provide new facilities to manufacture product packaging, using flexible eco-pouches. These were at an early stage of development and the project to develop them had only recently been put out to tender, the Arla spokeswoman said.

Packaging

This investment in diversifying its packaging materials signals the latest move by a major UK food manufacturer to explore alternatives to plastic.

Arla has already committed to using 100% recyclable plastic by 2020 and 50% recycled plastic in its plastic milk bottles. It described the latest move as further evidence of its commitment to creating a sustainable business.

A total of £5.5M has been allocated to upgrade processing facilities at Arla’s Lockerbie plant in Scotland. This figure has taken the company’s investment in Scotland in recent years to more than £44M, which included the installation of an anaerobic digester to offset the Lockerbie plant’s carbon footprint.

Arla said the continued investment was further evidence of the strategic importance it placed on its site in Scotland and its position as one of the most advanced dairy sites in the region.

Remaining UK cash

The remaining £32.5M would be split across Arla’s sites in Melton Mowbray, Llandyrnog, Malpas, Oakthorpe, Stourton, Settle, Oswestry and Trevarrian, said the company. The figure includes non-site-specific investments intended to enable Arla to continue driving growth for its farmer-owners and capitalise on the increasing demand for dairy.

“Arla is the biggest dairy company in the UK, owned by 11,200 farmers across Europe,”​ said Arla Foods UK md Tomas Pietrangeli. “This investment is almost double the investment of last year and, with the exception of building the Aylesbury dairy, it is the biggest annual investment for Arla in the UK​.

“While milk prices remain volatile and Brexit brings both uncertainty and opportunity, Arla farmers in the UK and across Europe are committed to continually investing in our UK business to maintain pace with the demand for nature’s original superfood, and the consumer choice it creates.”

Arla valued its economic footprint in the UK at more than £6bn in Gross Value Added, equivalent to 0.52% of the entire business’ economy and 0.33% of UK GDP.

International investment

The remaining £460M of investment would enable Arla Foods to keep pace with significant continued growth in dairy consumption across the world, the business said.

Half of the investments in 2018 would support targeted projects aimed at growing sales outside Europe. The company’s fastest-growing strategic non-European markets were the Middle East and North Africa, China and south-east Asia, Sub-Saharan Africa and the US, it said. 

Arla Foods Ingredients was set to receive large investments from its parent company, it added. These would total £87.5M in groundbreaking technology and capacity expansions to further production of high-quality value-added whey protein ingredients for international food industry customers. 

In line with significant targets on sustainability, set by Arla Foods in its Good Growth 2020 strategy, the company said it would also support a £13M investment across 46 projects to protect the long-term future of the planet.

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